Sunday, May 19, 2013

I was previously unaware of his interest in the land
of the Eagle. So -it seems- was he, until somebody offered him money

After I was approached to advise the Albanian government 10 years ago, I met with Prime Minister Berisha several times and also the then President Mosiu. I tried to give the government the benefit of my experience and my knowledge as an investment banker active in the region. With over twenty years being involved in the region I was also able to open up connections to other countries- like Estonia- who could advise and help. I developed a detailed knowledge of the relative merits of dams on the rivers Shkumbini and Drin, and the impact of one road route from Tirana to Elbasan versus another. I helped create links that supported the low tax policies which did so much to stimulate investment. I can understand the history, the economics and the politics that drive Albanian society. I know about Edith Durham, Zog, and the Congress of Prizren.

Blair, so far as I know, is driven not by personal interest, but by personal greed.

For the work I did, I was not paid a penny and neither did I ask to be paid.

So why did I do this?

Simply put, the extremely poor population of Albania needed help. I could help and so I did. I would not have taken the bread from the mouth of Albanian children- even if far too many Albanian officials would and did.

Tony Blair has no such scruples. He will take a multi-million Pound contract to "advise" the Socialist party in Tirana.

Edi Rama, the Socialist leader, is implicated in massive corruption, this clearly does not bother the former British Prime Minister.

When is a separate state not a separate state? Apparently, when it is proposed by the SNP. A leading luminary of the party, Andrew Wilson, is making the case that because British identity- a more or less positive thing in his view- comprises more than the political ties between the nations of the UK, that identity would survive the end of the common state.For me this is the central dichotomy in the argument for separatism: for many, if not most, Nationalists, the belief in self determination stops short of a situation where border posts are erected at Berwick. At the same time, the proposals that they put forward make it almost inevitable that Scotland would face much great isolation from the rest of the UK than the SNP says it wants.In recent weeks the Separatist argument has been utterly undermined by the total lack of honesty about what the price of independence would actually be. Even if you believe that Scottish independence is a desirable outcome, you have to accept that difficult choices must be made; that there are costs and benefits to an independent state, just as their are costs and benefits to maintaining the common state. At University most of us had to listen to the tedium of student nationalists explaining in great detail the fiscal and monetary policies-including who should appear on Scottish currency notes- of a separate Scotland. It almost defies belief that the SNP is in such disarray over currency. Yet having nailed their colours to the mast of the Euro- now deeply unpopular and not just in Scotland- the party was forced to row back from that position, and suggest that Scotland would keep Sterling. Yet the price of that implies a far different fiscal policy than the SNP proposes- and ignores the fact that the continuing UK would not permit the Scottish representation on the MPC that it currently already has. The third choice: a new Scottish currency is more logical and economically coherent, but it implies the end of the public spending policies that Scotland has embraced since the 1960s. It also implies a significantly more volatile currency- early on the short term increase in costs will make the new currency a far greater risk than Sterling. Even if later, the potential oil revenues provide a cushion, the fact is that a de facto petro-currency will make it much harder for the rest of the Scottish economy to compete in the global markets. The SNP knows that it can not maintain the comfort blanket of Sterling- but it refuses to admit to voters that there are huge risks in any path: the Euro or a new currency, that it chooses.

Those risks are only increased by the utterly irresponsible comments that the ruling party in Scotland has made about repudiating its share of the debt of the UK. Nothing could be more likely to render Scottish independence an unmitigated disaster than to begin its economic record as a separate state with a debt default. It would also open up the possibility of sanctions- not just from the continuing UK, but from the international debt markets.It is quite clear that Scotland- independent or not- needs to dramatically restructure its economy. The burden of having 60% of the economy under state control is barely supportable within the UK, and outwith the UK, it is clearly unsustainable. Indeed many Nationalists base their commitment to a separate state on the recognition that Scotland must change dramatically, and they doubt the willingness of Scottish Labour to make the changes that would benefit Scotland but weaken the political patronage that they rely on to be re-elected. Many in the SNP believe that the reform of Scotland can not be enacted inside the UK. Personally, I think reform must come first and that the complications of independence make the task of reform and restructuring much more difficult.That difficult task extends to the very basis of independence: the ability to defend the state if it is attacked. The complacent suggest that war in Europe is unthinkable, but the fact is that there are everyday security challenges- from Russian military overflights to the poaching of Scottish fishing fields- which require a credible military force. The maintenance of this force is much cheaper within an alliance, so the cost benefits of NATO membership are significant- as the higher military expenditure in neutral Sweden and Finland well demonstrates. Yet at the same time, Alex Salmond tries to be all things to all men. Scotland can hardly maintain membership of NATO, if its first act as an independent member is to close the Faslane nuclear base- a base as important for the major power of NATO- the USA- as it is for the current UK. Many Nationalists expect an independent Scotland to renounce nuclear weapons- but the price for this, the need for more conventional defence, is rarely -if ever- discussed.Russia under Vladimir Putin is a major threat to the global democracies and to world peace, and Scotland, situated at the entrance to Russian northern waters, is in a vital strategic position for the defence of NATO. The SNP is irresponsible to simply attempt to fudge two irreconcilable positions: armed neutrality or full NATO membership. Of course, some Nats simply suggest that the defence of Scotland could be one of the remaining shared issues with London. I think that this is naive in the extreme, since their decision to close Faslane has apprantly already been made. A choice of some kind must be made.The same casual disregard for the facts covers the putative Scottish foreign policy. The new state would need to establish a network of representation, but the reality is that this is yet another cost burden on a new state that will need to go through wrenching restructuring as it is. The idea of giving some Scottish ambassador the kind of prestige that his UK counterpart already has will probably be deeply unpopular in Sighthill, where life in the short term will be much harder. The key relationships for Scotland will remain Brussels and Washington as they are for the UK, but the critical relationship will be in London- if there are differences between Edinburgh and London, these will need to be addressed by diplomacy, not by Parliament. YT, as Ireland already does, Scotland will need to in large measure to adapt to whatever policies London sets- there are inherent limits to independence, for always the continuing UK will have the ultimate sanction of shutting out a separate Scotland. Again the complacent argue that the EU will prevent this, yet as the rise of anti EU sentiment continues across the continent, it is by no means clear that Scotland can rely on the EU in its dealings with the continuing UK. Initially Scotland would not even be a member of the EU- that is the clear legal position, albeit one that the SNP has tried to lie about- and although we can hope that suitable transition measures can be made that minimise disruption, Scotland would need to rely on the goodwill of London in order to avoid real isolation. In the long term, it is possible that Scotland would be a member of the EU, but London not- either way the border would not be the invisible line that it is today.This brings us to the final SNP irresponsibility: the assumption that the process of divorce would be as simple and positive as between the Czechs and Slovaks. Firstly Czechoslovakia as a state was only founded in 1918, and was dissolved for the seven years between 1938-45, whereas the history of the United Kingdom stretches back over three hundred years. There are far more issues to negotiate between Scotland and the continuing UK- and from maritime borders, to defence, to pensions, there are huge complications arising from the slightest differences. It is hard to see that no emotions will enter into the debate. As with most divorces, it is easy to see how disputes could become very acrimonious indeed. The SNP thinks- Pangloss like- that the solutions will always be positive, simply because it is the SNP that proposes them. They do not understand the ramifications of failure.Scotland needs to change- that has been clear for most of my life. Yet it seems to me- and to most Scots- that the SNP believes that it can gain "independence lite", where it can benefit from the things that are British: a common currency, common economy, common monarchy, perhaps even common armed forces or foreign representations, but reject the things of the menu that it doesn't like. To my mind such things must be negotiated within the framework of the United Kingdom. I see little point in "independence lite", given the incredible risks and difficulties of negotiating this. The reality is that independence will need to be a genuine independence, which inevitably carries far greater risks.I am a Liberal and therefore I believe in home rule for Scotland. I believe that most SNP supporters also believe in some kind of continuing British identity. Scotland can, of course, become a viable independent state- and I am not afraid of it. Yet the SNP has not been open about the likely price of a separate state, and it fails to address fundamental questions about the choices that must be made in order to make a separate Scotland a success.

To my mind we should stop trying to follow the mirage of a separate state and commit to seeking change within the framework of a remade, federal UK. The majority believe that Scotland is Better Together in the UK- and even if the Nationalists do not believe that Scotland can reform within the UK, the fact is that their dishonesty and confusion as to what Scottish independence actually means is failing to persuade the Scottish people.The SNP can not have its cake and eat it- and the likely failure of their referendum should mark the beginning of a new and real debate about the future of what we already have.

Friday, May 17, 2013

"Japan needs to be taught a lesson"Thus opened a conversation with a significant figure in China. A successful businessman with global interests and an international outlook, yet such sentiments are now a commonplace in modern China.With some justification, the Chinese point to their history as a non colonial power to suggest that their country is not aggressive, yet that is increasingly not the way that China's neighbours see it. The country, whether the People's Republic or simply the Republic of China (Taiwan), has disputes with more or less all of its neighbours. Whether it is territorial claims in the South China Sea, which challenge Vietnam, the Philippines, and even Brunei and Malaysia, or the land borders with India, or of course the growing tension with Japan over islands in the East China Sea, the Chinese are newly assertive and even- say their critics- aggressive.A growing problem is that increasingly the Chinese do not regard the US alliance with Japan as unconditional- they do not believe that the Americans are prepared to risk a nuclear exchange to prevent a mere "punitive expedition". This, I think, severely compromises the position of the US, but also peace in Asia. If the Chinese decide to "teach Japan a lesson" then the rest of the region will make its own decisions as to the value of the US defence guarantees that they too receive. Some states might seek an accommodation with Beijing, but if the pattern of nineteenth century in Europe were followed, even a "small victorious war" against Japan could be like the Franco-Prussian conflict, but equally it would unite China's maritime neighbours against the heartland in an eerie replay of Germany's mistakes after Bismarck.

What then, is the significance for Asian conflict in the wider world? For Europe the critical issue will be Russia. Is Russia a kind of Austria-Hungary, that will find that its decayed authoritarianism fits in more easily with the more muscular version of Beijing? Alternately will Russia find its European culture and historic fear of China overcomes the sympathy Putin clearly feels for the Communist regime in Beijing? At this stage we can only speculate. Yet If there was a global breakdown on the scale of 1914, the position of Russia would be critical as to whether Europe could avoid being caught up in the conflagration. The assertiveness of China in the East China Sea has uncomfortable parallels with the assertiveness of Russia against NATO. Yet if Europe is to avoid becoming a charnal house for the third time in a century, it is now critical that NATO opens a dialogue with the Kremlin. It is, perhaps, encouraging that Russia is also seeking to resolve some previously intractable disputes, such as the border issues with the Baltic.For the reality is that the situation is Asia really is that serious. The brashness of the Chinese in their dealings with the wider world masks a real fear of internal upheaval, and the PRC stokes nationalist feeling to hide the growing challenges to the legitimacy of Communist rule. The provocations of Japan are foolish in the extreme, but the fact remains that the United States- and by extension NATO- are locked into an alliance with Japan which they can not walk away from- or they risk undermining the stability of the whole of Asia for the coming century. As India glowers at the Chinese across their disputed border, the parallels with 1870, or even 1914 grow more uncomfortable: China as an analogue to Germany, Russia to Austria Hungary, India to Czarist Russia, Japan as an analogue to France, and the United States to the British Empire.In 1914 the Kaiser was incredulous that Britain was prepared to go to war over "a scrap of paper"- the entry of Great Britain into the First World War was as unexpected as it was unwelcome to Berlin: London had failed to communicate to Berlin their deadly earnest, as it seems Washington is failing now to communicate to Beijing their firm intention to defend the status quo in Asia.In the end the lesson that Europe learned was that modern warfare is an experience so horrific that anyone who used war as an instrument of policy was, by definition, a criminal. In the end must humanity in twenty-first century Asia follow the same destructive path that it followed in twentieth century Europe?That would surely be a terrible lesson to relearn.

Thursday, May 16, 2013

I have been travelling so, as usual, blogging is light.In fact I am currently in Hong Kong- my first trip out of Europe for some years, and my first back to this region in over 16 years. The ant hill of Hong Kong is a contrast to the calming silence of unpolluted Estonia. In fact it is what Estonia does not have that makes it a richer place than this city, where money making is the only imperative. Estonia does not have grey skies and pollution, it has crystal clear blue skies and Tallinn has the cleanest air of any capital city in the world. Estonia does not have people, it has silence and unspoiled nature. Estonia does not have congestion but it does have the first complete network of electric car charging points. A few days ago I went over the border to Shenzhen- and whatever Hong Kong is, Shenzhen is now more: more people- over ten million- more pollution, more industry. Shenzhen is not even the biggest city in Guangdong Province, that dubious honour goes to the capital, Guangzhou. It is banal to say that China is large and Estonia is small, and even if true it does not get to the root of the issue. China has adopted the mores of Hong Kong and they are now working to a model of economic growth that glorifies excess. Wealth and power are worshiped, and moral values trade at a discount. The result is the complete degradation of the environment. You can taste the pollution on your lips in Shenzhen, and this, compared to the industrial cities inland, is not a notably poisoned place.It is a commonplace to say that if China achieves the same GDP per capita as the United States, the resources consumed will require six more planet Earths. Yet, of course, no such outcome is possible. It is clear then that something else will happen. Either China changes its pattern of development or it will face environmental changes that will ultimately cap its level of growth. Humans are notably foolish, so I expect that the Chinese regime- like those elsewhere- will not wish to change unless it is forced to do so.Perhaps that day may be closer than we think. Although life is better than ever for most Chinese- and an unthinkable distance from the catastrophes of the "Great Leap Forward" and the Cultural revolution- I wonder whether the Chinese Communist Party, which seems to be perfectly entrenched, can make the changes that it needs to in order to create a sustainable economic model. Although democracies are by no means perfect, there are ways and means to effect change- even profound change- if the political will is there. As so many Chinese wake up to the reality of a degraded environment and diminishing resources, the culture of excess must give way to a new social contract which is more respectful of the natural world. In Eastern Europe, one of the first challenges to the political status quo of Soviet poweremerged when it became clear that the extractive values of Soviet system were destroying the natural world. In China now, the blatantly fabricated air quality numbers are a source of growing cynicism. Even though the numbers routinely show safe limits breached by five or even ten times, the whole of China knows that the real numbers are many multiples worse. The Chinese leadership must know that pollution and environmental degradation are huge and growing problems, yet they lack the will to take the bitter decisions that will improve the situation.GDP growth is everything; for growth creates wealth and wealth creates power. Yet in Estonia the forests grow silently, and I know that living in a country with clean space, clean water, clean air and an unspoiled natural environment already makes me far richer than the tai-pans of Hong Kong or Shenzhen.